Obama and Middle Class Taxes

Again, Obama is falsely accused of planning to impose more taxes on the middles class. Here is an unbiased account of Obama's policy. www.factcheck.org

"A McCain ad wrongly claims Obama plans "painful tax increases" for working families. And who's talking about deficits?

Summary

McCain's new ad puts another stitch in what we've called his pattern of deceit on Obama's tax plan. This one claims Obama and congressional Democrats plan to push forward "painful tax increases on working American families" and that they will bring about "years of deficits," "no balanced budgets" and "billions in new government spending."

The ad is plain wrong about higher taxes on working families. In fact, Obama's economic plan would produce a tax cut for the majority of American households, with middle-income earners benefiting most. As for "years of deficits," exactly the same claim could be made about McCain's program. It's unlikely either Obama or McCain would balance the budget, and both are projected to increase the debt by trillions.

Analysis

We've already reported on at least three other ads, in both Spanish and English, from Sen. John McCain's campaign that distort his rival's tax policy. The ads claim that, for example, Democratic Sen. Barack Obama would raise taxes "on the sale of your home" and that he has a "history of raising taxes" and that he wanted to raise taxes on "families" making just $42,000 a year.

Claims like these have led us to say that McCain's campaign is engaging in a "pattern of deceit" when it comes to describing Obama's tax plan. This most recent ad fits right into the template.

Tax Counter-Spin

The ad says Obama and “out of touch Congressional leaders” plan to implement “painful tax increases on working American families,” and it shows an image of a family presumably upset about an impending tax increase. But, as we've reported numerous times, Obama proposes a tax cut for the vast majority of households.

John McCain 2008 Ad:
"Expensive Plans"

Crowd: Obama, Obama…
Announcer: Take away the crowds, the chants. All that’s left are costly words. Barack Obama and out of touch congressional leaders have expensive plans. Billions in government spending, years of deficits, no balanced budgets, and painful tax increases on working American families. They’re ready to tax, ready to spend, but not ready to lead.

We spoke with Len Berman, director of the nonpartisan Urban-Brookings Tax Policy Center, which has produced one of the most authoritative analyses of the two candidates’ tax plans. When we asked him if Obama’s claim that he would “cut taxes for 95 percent of all working families” was true, Berman told FactCheck.org that it was “consistent with our estimates.” Overall, the TPC found that Obama’s plan would produce a tax cut for 81.3 percent of all households, and a cut for 95.5 percent of all households with children.

Under Obama's plan, the TPC estimates that people (or couples) making between $37,595 and $66,354 a year would see an average savings of $1,118 on their taxes.

Under McCain's plan, on the other hand, those same individuals would save $325 on average — $793 less than the average savings under Obama's plan.

Put It on Our Tab

The ad also claims that Obama and congressional Democrats would bring about "years of deficits." But (and we've reported this before, too), the fact is both candidates' economic plans would fail to bring an end to deficit spending, and by that measure, McCain's is worse than Obama's. According to the TPC analysis, Obama's tax plan would increase the debt by $3.5 trillion by 2018, while McCain's plan would bring about a projected $5 trillion increase in the same time frame. The TPC also found that:

Tax Policy Center (Aug 28): Neither candidate’s plan would significantly increase economic growth unless offset by spending cuts or tax increases that the campaigns have not specified.

The Obama campaign maintains that the Tax Policy Center's estimates don't account for Obama's proposed spending cuts, including things like ending the Iraq war. But those cuts will not come close to balancing the budget, and Obama has avoided promising a balanced budget during his first term.

McCain, however, has said he will balance the budget by 2013. Experts remain skeptical. In early July, The New York Times quoted Robert L. Bixby, executive director of the Concord Coalition — a bipartisan fiscal responsibility advocacy group — as saying the claim was "unlikely":

Robert L. Bixby (as quoted by The New York Times, July 8): It’s feasible to balance the budget by 2013, but very unlikely under the policies Senator McCain has proposed. The spending cuts are far too vague to be counted on for significant savings and, even if they were more specific, I can’t see how they would come close to offsetting the level of tax cuts he recommends.

McCain senior economic adviser Douglas Holtz-Eakin sent The Washington Post's editorial board a copy of McCain's plan in support of the candidate's claim. But the board concluded, in its July 14 editorial, that the plan was "not credible."

So the ad's claims about deficit spending and "no balanced budgets"? They could be applied just as easily to McCain as to Obama and the Dems. And we're not sure McCain really wants to go there."

-by Emi Kolawole

Sources

Burman, Len, et. al. “An Updated Analysis of the 2008 Presidential Candidates’ Tax Plans: Revised August 15, 2008.” Tax Policy Center, 15 Aug. 2008.

Table T08-0182, Senator McCain’s Tax Proposals as Described by his Economic Advisors, Distribution of Federal Tax Change by Cash Income Percentile, 2009. Tax Policy Center, 19 July 2008.

Gleckman, Roberton Williams and Howard. "An Updated Analysis of the 2008 Presidential Candidates' Tax Plans." 28 August 2008. The Tax Policy Center. 29 August 2008

Urban-Brookings Tax Policy Center, "Table T08-0203 - Senator Obama's Tax Proposals of August 14, 2008: Economic Advisers' Version (No Payroll Surtax), Distribution of Federal Tax Change by Cash Income Percentile, 2009" 14 Aug 2008.

Rohter, Larry. Will the Real Tax-and-Spender Please 'Fess Up?. 13 Jun. 2008. The New York Times. 2 Sep. 2008.

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